FILE PHOTO: The Netflix logo is pictured on a television in this illustration photograph taken in Encinitas California__________________________

(Reuters) - A growing number of U.S. cable operators are forming alliances with Netflix Inc NFLX.O, a shift that is helping the streaming pioneer add customers as its largest single market matures.

No. 3 distributor Charter Communications Inc CHTR.O is expected to make Netflix available through its set-top boxes, joining more than a dozen top U.S. pay television operators adopting a model first rolled out in Europe. Some U.S. providers could start selling the streaming service as part of their Internet and video packages.

Altice NV ATCA.AS is trying that approach in France, and the company aims to extend the deal to the United States, two sources with knowledge of the matter said during the past three weeks. They requested anonymity because the discussions are private.

"Our whole model is about cooperation with many of the (streaming) providers," Altice USA ATUS.N Chief Executive Dexter Goei told reporters in May.

Netflix also indicated it wants to take the arrangement elsewhere, though the timing of any new deals is uncertain.

"We're now looking at proposals for including Netflix in some services and beginning to learn the bundling part of the business," Netflix CEO Reed Hastings said during a post-earnings webcast in July. "We're interested in expanding that."

Additional tie-ups could help Netflix hook new users in the United States, a market analysts have said is nearing saturation while growth in foreign markets is booming. The number of subscribers is the key metric for Netflix investors, and the breakneck growth has made the company a Wall Street darling.

Netflix reported 51.92 million U.S. streaming customers as of June 30, and 52.03 million in international territories, handily beating analysts' forecasts.

The addition of Netflix to set-top boxes helped the company top expectations for the U.S. market, Cowen & Co analyst John Blackledge said.

The closer ties with pay TV providers represent an about-face from the early days of Netflix streaming, which started in 2007. Many in the pay TV industry viewed the digital upstart as a challenge to their longtime business of selling bundles of channels delivered via cable wires or satellites.

But as Netflix soared in popularity, distributors began concluding it was more beneficial to welcome Netflix because their customers were using the service anyway.

Cable executives see the partnerships as a way to help fight cord cutting, the dropping of pay TV service, and to promote higher-speed Internet service. In some cases, distributors receive a cut of subscription revenue when they sign up new Netflix users.

The set-top integrations began in 2013 with Virgin Media in Britain. U.S. partnerships started in 2014 with a few smaller distributors including RCN Telecom Services.

For RCN customers with TiVo TIVO.O boxes, Netflix is listed as a channel in the on-screen lineup, requiring just a press of a button to switch from a cable network.

RCN viewers who have not subscribed to Netflix can do so on the spot, starting with a one-month free trial. More than 80 percent become paying Netflix customers, RCN Chief Operating Officer Chris Fenger said in an interview. "There is a very high conversion rate."

By the end of 2016, 13 of the top 25 U.S. pay TV distributors had similar arrangements with Netflix, according to Blackledge.

U.S. market leader Comcast Corp CMCSA.O in November embedded Netflix into its Xfinity X1 set-top box, which is used by 55 percent of its 21.5 million residential video customers. Thirty percent of X1 users have logged into Netflix, either with an existing account or by signing up for a new one, the company said in May.

Charter also plans to integrate Netflix, CEO Tom Rutledge has said. A launch date has not been set.

(Reporting by Lisa Richwine in Los Angeles, Anjali Athavaley in New York and Gwenaelle Barzic in Paris; Editing by Anna Driver and Richard Chang)

7, 2017 | 06:53AM PTNetflix — in the first company acquisition in its history — has bought Millarworld, the comic-book publishing firm founded by Mark Millar, creator of characters and stories including Kick-Ass, Kingsman, and Old Man Logan.

Terms of the transaction weren’t disclosed. Netflix said it will develop films, TV shows and kids’ series based on Millarworld’s portfolio of character franchises to life through films, series and kids’ shows. Millarworld will also continue to create and publish new stories and character franchises under the Netflix label.

For Netflix, the move reflects its desire to own and develop intellectual property, rather than simply license it. Netflix chief content officer Ted Sarandos, in announcing the deal, said: “As creator and re-inventor of some of the most memorable stories and characters in recent history, ranging from Marvel’s The Avengers to Millarworld’s Kick-Ass, Kingsman, Wanted and Reborn franchises, Mark is as close as you can get to a modern-day Stan Lee.”

Added Millar: “This is only the third time in history a major comic book company has been purchased at this level,” after Warner Bros. bought DC Comics in 1968 and Disney bought Marvel in 2009.

“I’m so in love with what Netflix is doing and excited by their plans,” Millar said. “Netflix is the future, and Millarworld couldn’t have a better home.”

Scotland-native Millar runs Millarworld with his wife, Lucy Millar. Previously he spent eight years at Marvel, where he developed the comic books and story arcs that inspired the first Avengers movie, “Captain America: Civil War,” and “Logan,” which collectively grossed over $3 billion in worldwide box office. His 2002 comic book “The Ultimates” was named best comic book of the decade by Time’s Techland.com and was described by “Avengers” screenwriter Zak Penn as the blueprint for the Marvel cinematic universe. Millar also worked at DC Comics, where he created the graphic novel “Superman: Red Son.”

Since Millarworld was started in 2004, the company and its co-creators have produced 18 character worlds. Three of those — Wanted, Kick-Ass and Kingsman — have been adapted as theatrical films that together have grossed nearly $1 billion at the global box office. Other members of the Millarworld universe include Jupiter’s Legacy, MPH, Chrononauts, Reborn, Huck, Starlight, Superior, Nemesis, War Heroes, Supercrooks and American Jesus.

In a blog post on his company’s website, Mark Millar said he will be flying to Los Angeles to “strategise the next steps” with Netflix — while he takes a hiatus from producing new comics. “‘Jupiter’s Legacy’ and ‘Reborn’ both concluded in the last few weeks and I’m going undercover between now and spring as I stockpile all the new projects we’re putting together, but you’ll hear about them very soon,” he wrote.

New York City-based Hughes Hubbard & Reed advised Millarworld in the transaction.

DIS Walt Disney to end agreement with Netflix for subscription streaming of new releases as Disney is planning to launch its ESPN-branded multi-sport video streaming service in early 2018. alphastreet.com/bite/3c4c4f5

"So far, it's a partnership that has worked out advantageously for both parties. While Netflix famously does not disclose its viewing figures, San Diego-based Luth Research conducted an independent study last year and determined an estimated 10.7% of Netflix's subscribers streamed Daredevil, far more than Netflix's other popular original properties in House of Cards and Unbreakable Kimmy Schmidt."

It's too bad the deal didn't last longer, but maybe three years is a long time in the ultra competitive streaming world and that's all Netflix could get from Disney.

In one of the biggest talent gets for Netflix yet that could shake up the drama series TV landscape, the streaming giant has landed one of the top drama showrunners on broadcast television, Shonda Rhimes. After a long tenure at ABC Studios, the Grey’s Anatomy and Scandal creator is leaving the studio for a mega multi-year deal at the streaming giant, Netflix announced Sunday night.

Heading to Netflix with Rhimes is her Shondaland, which over the past year she had built into a full-fledged production company with its own infrastructure. Shondaland, in which Rhimes is partnered with Betsy Beers, will function as a division of Netflix’s in-house studio.

Rhimes had one more year under her four-year deal at ABC Studios. I hear she negotiated an early exit so she can go to Netflix. I hear the deal with Netflix has a length similar to the four-year ABC Studios pact and is richer.

While Netflix has been very aggressive, bringing in series from A-list showrunners like Jenji Kohan, Marta Kauffman, and Chuck Lorre, this is one of the boldest poaching moves by the deep-pocketed streaming network, luring away from network television one of its top writer-producers at the top of her game.

A scene from the Pixar film “Inside Out.” In the past, Disney made its biggest bets on intellectual property, as it did with its acquisition of Pixar. Credit Disney/Pixar______________________________________

Is content still king?

It was Bill Gates of Microsoft who declared it so in 1996, but the proposition has been repeated so often by Disney executives that it could have served as the company’s corporate slogan.

When AT&T announced its plan to take over Time Warner 10 months ago, Disney’s chief executive, Robert A. Iger, said the deal proved yet again that “content is king.”

So Disney’s abrupt strategic shift just two weeks ago sent shock waves through Hollywood, Silicon Valley and the telecommunications industry. The company said it was buying 42 percent of the internet distributor BamTech for $1.6 billion (bringing its stake to 75 percent), creating its own direct-to-consumer streaming service, and severing its lucrative licensing deal with Netflix for Disney-branded content in the United States.

“Is the network — the platform — now most important?” asked Michael Olson, the consumer internet analyst who covers Netflix for Piper Jaffray, when we spoke last week.

In keeping with that philosophy, Disney made its biggest bets on intellectual property, acquiring Pixar ($7 billion), Marvel Entertainment ($4 billion) and Lucasfilm ($4 billion). Those bets have paid off handsomely for shareholders.

Mike Colter, center, in “Marvel’s The Defenders,” a television series streamed by Netflix. Credit Sarah Shatz/Netflix _______________________________

But as internet streaming disrupts channels like cable and broadcast, Disney now appears to have set its sights on distribution — and a potential new revenue source.

There’s no question that the internet generally, and Netflix specifically, upended the traditional content-distribution supply chain and caused profound changes in the entertainment industry. As The New York Times reported this week, Google, Apple and Facebook are moving aggressively into Hollywood’s turf, preparing to spend billions to create original programming, as Amazon did before them.

These technology giants already have huge user bases and open checkbooks. In July, Netflix said that it had achieved a larger-than-expected increase in subscribers, who now total 104 million, and that it was reaching about half of United States households.

“Anyone who wants to compete directly with Netflix or the full spectrum of competitors who are getting into this space had better be ready for a long, hard fight and have very deep pockets,” said Mr. Olson at Piper Jaffray. “They have the money to spend on content, and they already have huge direct-to-consumer user bases and traffic.”

Netflix got where it is today in part by licensing Disney’s popular children’s offerings and Disney- and Pixar-branded films. Neither company has disclosed what Netflix pays for those rights, but analyst estimates range from about $220 million to $300 million a year.

As long as Netflix was primarily a distributor, it posed no threat to Disney, and offered a revenue source to complement Disney’s cable channels and movies. Investors cheered when the licensing deal was announced in 2012. But Netflix went from partner to competitor by spending heavily to create its own programming — especially in the coveted children’s market long dominated by Disney.

Next year Netflix is adding a new animated series based on Dr. Seuss’s “Green Eggs and Ham,” with Ellen DeGeneres as executive producer. It also has a deal with DreamWorks Animation for 300 hours of new children’s programming.

Netflix is competing with Disney on other fronts, too. Netflix said two weeks ago that Shonda Rhimes, the prolific television producer who created hits like “Grey’s Anatomy” and “Scandal,” would move to Netflix after 15 years at Disney’s ABC Studios.

The question remains: Does Disney need Netflix? Disney will be losing substantial licensing revenue, betting that it can build its own direct-to-consumer model, capture the full value of its programming and find a new path to revenue growth as cable channels decline.

And it’s hedging its bet. For now, Disney’s Marvel and “Star Wars” programming remains on Netflix. The most common criticism I heard wasn’t that Disney was trying to create its own direct-to-consumer model, but that it had waited too long.

Still, nearly everyone agreed that if anyone can pull it off, it’s Disney — and only a few others.

“Disney makes a lot of amazing content, and no one can replicate it,” said Doug Creutz, senior media and entertainment analyst at Cowen & Company. “But they’re putting a significant revenue stream at risk. If they succeed, they’ll capture all the revenue, but may accelerate disrupting the cable bundle. And it may not succeed. Fifteen percent of a big number is a lot better than 100 percent of nothing.”

As Mr. Creutz put it in a research note, Disney’s move is putting “a very settled and successful part of the business model” at risk and “more aggressively pushes the traditional content business into terra incognita.”

Mr. Olson agreed. “If anyone can do it from a content perspective, it’s probably them, because of their unique brand awareness,” he said. “But they’re coming from way behind.”

Investors didn’t like the uncertainty, or the prospect of a full-fledged war between Disney and Netflix. Disney stock dropped on the news and this week was trading at about $102 a share, down from $110 at the beginning of August. Netflix shares also dropped from their lofty perch, falling from $182 at the beginning of the month to $167 this week.

But Kevin A. Mayer, Disney’s head of corporate strategy and business development, told me that his company’s move wasn’t a Disney vs. Netflix issue, but just the first step in a long-term growth strategy for Disney. “We can both do really well,” he said. “There’s no zero-sum game here.”

Although it may seem a paradox, Mr. Mayer says he believes Disney’s move into direct-to-consumer distribution — not to mention the tech world’s rush into original programming — demonstrates that “content is everything these days.”

Unlike the old world of cable and broadcast, “the barriers to entry for an over-the-top provider are pretty low,” he said, meaning a provider that distributes content directly to consumers through the internet. “All the consumer is buying is content, not the apparatus to deliver it. Netflix is only as good as its content and its brand. We’re already good at both.” (Netflix officials declined to talk to me for this column.)

In short, from Disney’s perspective, Mr. Mayer said, “content is more king than ever.”